Av Concept Holdings LimitedHKEX: 595

Discloseable transaction: subscription of bonds issued by ie limited

· Issued by Av Concept Holdings Limited
E160611222Ann.indd

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 595)

DISCLOSEABLE TRANSACTION: SUBSCRIPTION OF BONDS ISSUED BY IE LIMITED

The Board wishes to announce that on 8 June 2016, New Concept, a wholly-owned subsidiary of the Company, and IE Limited entered into the Subscription Agreement in respect of the Subscription, pursuant to which, among other matters, New Concept has conditionally agreed to subscribe for, and IE Limited has conditionally agreed to issue to New Concept, the Subscription Bonds at an aggregate consideration of US$2,500,000 (equivalent to approximately HK$19,425,000), subject to the terms and conditions of the Subscription Agreement.

As the Subscription and the Previous Acquisition (details of which are set out in this announcement) were entered into within a 12-month period prior to and inclusive of the date of the Subscription Agreement, each of the Subscription and the Previous Acquisition were aggregated pursuant to Rule 14.22 of the Listing Rules. The Previous Acquisition did not constitute a discloseable transaction of the Company pursuant to Chapter 14 of the Listing Rules. The Subscription constitutes a discloseable transaction of the Company pursuant to Chapter 14 of the Listing Rules. Assuming the conversion rights attached to the Subscription Bonds are exercised in full, the conversion of the principal amount of the Subscription Bonds into 5,827,500 Conversion IE Shares at the initial Conversion Price constitutes a discloseable transaction of the Company pursuant to Chapter 14 of the Listing Rules.

As certain of the applicable percentage ratios as defined under the Listing Rules in respect of the making of the Subscription in aggregate with the Previous Acquisition exceed 5% but all applicable percentage ratios are lower than 25%, the Subscription and the Previous Acquisition, in aggregate, constitutes a discloseable transaction of the Company pursuant to Chapter 14 of the Listing Rules and is subject to notification and announcement requirements pursuant to Chapter 14 of the Listing Rules.

The Board wishes to announce that on 8 June 2016, New Concept, a wholly-owned subsidiary of the Company, and IE Limited entered into the Subscription Agreement in respect of the Subscription.

THE SUBSCRIPTION AGREEMENT

The major terms of the Subscription Agreement are set out below:

Date

8 June 2016

Parties

Subscriber : New Concept, a wholly-owned subsidiary of the Company.

Issuer : IE Limited, a company organised in Korea with limited liability whose shares are listed on KOSDAQ. The IE Group is principally engaged in oil retail and wholesale.

As at the date of this announcement, IE Limited is owned as to approximately 13.52% by the Group, and Mr. So Chi On, executive Director, is a director, the chairman and co-representative of IE Limited. Save as disclosed above, to the best of the Directors' knowledge, information and belief after having made all reasonable enquires, each of IE Limited and its ultimate beneficial owner(s) is an Independent Third Party.

Subject matter of the Subscription Agreement

New Concept has conditionally agreed to subscribe for, and IE Limited has conditionally agreed to issue to New Concept, the Subscription Bonds.

Principal terms of the Subscription Bonds

Set out below are the principal terms of the Subscription Bonds:

Issuer: IE Limited. Principal amount: US$2,500,000 (equivalent to approximately HK$19,425,000). Issue price: 100% of the principal amount of the Subscription Bonds. Rank: The Subscription Bonds constitute direct, unconditional, unsecured and unsubordinated obligations of IE Limited and rank pari passu among themselves and (other than any obligations for which priority in payment is conferred by mandatory provisions of law) with all other present and future direct, unsecured and unsubordinated obligations of IE Limited. Form and denomination:

In registered form. After one year from the date of the issuance, the bondholder may at its discretion exchange the certificate representing the bonds for certificates in integral multiples of US$10,000.

Interest: The Subscription Bonds shall bear interest at the rate of 4.0% per annum from and including its issue date to but excluding the Maturity Date (as defined below) unless redeemed or converted earlier under the terms and conditions of the Subscription Bonds. Maturity date: Second anniversary of the issue date of the Subscription Bonds ("Maturity Date"). Conversion period: At any time after the first anniversary of the issue date of the Subscription Bonds up to the close of business (in Seoul) on the date one business day prior to the Maturity Date. Conversion price: The initial Conversion Price is KRW500 (equivalent to approximately HK$3.33) per Conversion IE Share.

The Conversion Price will be subject to adjustment for the occurrence of events of IE Limited such as stock splits, stock consolidation or reclassification of shares. Notwithstanding these events, the Conversion Price may not be reduced so that, upon conversion of the Subscription Bonds, the Conversion IE Shares would be issued at a price less than their par value.

Conversion Shares: Assuming the conversion rights attached to the Subscription Bonds are exercised in full, at the initial Conversion Price of KRW500, the Subscription Bonds may be converted into 5,827,500 Conversion IE Shares, representing:

  1. approximately 4.18% of the issued shares of IE Limited as of the date of this announcement; and

  2. approximately 4.02% of the issued shares of IE Limited as enlarged by the allotment and issue of the Conversion IE Shares.

Redemption: Unless previously redeemed, converted or purchased and in each case cancelled as provided in the terms and conditions of the Subscription Bonds, IE Limited will on the Maturity Date redeem the Subscription Bonds at 100% of its principal amount. Consideration

The issue price of the Subscription Bonds is at price equal to 100% of the principal amount of the Subscription Bonds, i.e. US$2,500,000 (equivalent to approximately HK$19,425,000).

The initial Conversion Price of KRW500 (equivalent to approximately HK$3.33) was arrived at after arm's length negotiations between IE Limited and New Concept and was determined in accordance with the applicable Korean laws.

Payment of the issue price of the Subscription Bonds will be made in cash on the Closing Date and funded by the Group's internal resources.

Closing Conditions

The Closing shall be conditional upon the following conditions being fulfilled (or waiver by such party to the Subscription Agreement, if applicable) before or at the Closing, provided that a party shall not be excused from obligations based on any of the condition if non-fulfillment thereof results from such party's failure to use its reasonable, diligent efforts to obtain and effect any government approvals and any consents of third parties, or other procedures, that are necessary for the Closing or other fault of such party:

  1. each of IE Limited and New Concept has complied with those covenants under the Subscription Agreement that are required to be complied with by it before the Closing and the representations and warranties given by each of IE Limited and New Concept under the Subscription Agreement are true and correct in all material aspects as of the Closing Date; and

  2. no lawsuit or other legal proceeding is pending, or threatened, that challenges the validity of the Subscription Agreement or seeks to restrict the transactions provided for thereunder.

    Closing shall not proceed unless and until there occurs the fulfillment of each of the following conditions:

    1. all approvals or authorisations from, or registration or filing with, any government authority or securities exchange, and any other consent from or notice to a third party, or other procedure, that is required of any party to the Subscription Agreement for (and prior to or as of) the Closing under applicable laws, or securities exchange rules, has been duly obtained and effected;

    2. the sole shareholder of New Concept having approved the Subscription Agreement and transactions thereunder by a special resolution; and